When you are teenager you think that money has an endless resource, your parents. You think that they earn massive amount of money (they don’t) but still you want everything possible and impossible thing. And your parents are willing to give it to you because they adore their little bundle of joy. Value of money is abstract and even if you don’t get everything you want you still don’t know in reality that money is not endless resource.

I think that true value of money is learned first time when you get your first summer job or in some cases your first real job. I have worked first summers and then I had part time job trough out my schools, even if the student benefits are really good in Finland but that is another story. That has definitely thought me what is the true value of money and that money has to be respected.

True value of money is not that you have endless amount of it but the truth behind how you spend it. Now we have news that people are getting too much debt related to their earnings. Fast credits are increased and especially young people are in trouble with them and the interest rate? It is huge. People should realize that keyword is that you have to match your spending to your earnings. People think that spending money is like race you should win, and it is called the spending race. Get bigger house than you friends, bigger car and so on and in the end you have a large amount of debt and then it starts to crumble. Interest rates are low at the moment and it is still relatively easy to get a loan if you have steady earnings. But the thing is that now days even if you have steady earnings today it can be that it is not that tomorrow and we come to the point that everybody should be interested in general state of economics and how it is affected to our personal economics. In a book Financial Crises, Causes, Context and Consequences written by Adrian Buckley he mentioned that many consumers run up large debts on their credit cards. They pay only minimum instalments each month and are leaving the balance of debt to increase over time. (Buckley 2011, 42) This is discussion about UK consumers but in my opinion is also valid to Finnish consumers. Credit cards are also relatively easy to get with steady earnings they promise you credit limits half of you gross earnings and then you spend it and before you know it is vicious circle of different credit card debts. Because when you need to buy things and you are not willing to wait you want it now. And the way to get it? It is the credit card you can get directly from the shop, how easy.

I would like to recommend some reading to everybody who are even a teeny tiny bit interested in their own finance and also generally about finance. First is Everyday Economics written by Lawrance H. Officer. This is US book but most parts of it are still related to general everyday economics and can also be valid to our life here in Finland. In his book he handles the situations we all have regarding the money and finance. For example what kind of debt and how much of it is okay to have. He says that it depends in three things. First is that you are making an important and sound investment with debt. (For example a house), second factor is that you can safely carry with your future earning power and third factor is how important you view your future compared to you present standard of living. More debt you have now the lower your standard of living will be in the future, because you pay off the debt. (Officer 2009,54-55) This is something to think about when you are reaching to that shiny credit card.

Second book is in Finnish and it is written by Sixten Korkman. Book is called Talous ja Utopia. Translated that is Finance and Utopia. This is more related to understand general finance and public economy. Why I recommend it is that he wants to write about it so that we all understand what are the meanings of finance and economy. He says that finance as subject is sometimes complicated and hard but it affects to our everyday life. (Korkman 2012, 9)

So where have we come with the thought how do we spend it or do we save it? I think it is important to talk to young people about finance and money and how to spend it wisely. We don’t all have to be winners in a spending race. It should be also important to be aware about general finance situations. Because in hard financial times your secure job today, is maybe not secure tomorrow. We should think do we reach to that shiny credit card or do we do some old fashioned saving before we spend it. Because let’s face it is important to think about your finances, and good day to start is today!

Under here are few links.

First are different personal finance calculators you can try. Currency is in dollars but amounts are inserted by yourself so you can think them as in Euros.

Second one is in Finnish and it is called Kodin talous where you find different kind of useful links about personal finances.

One Response to Do we spend it or do we save it? Money is the issue.

There was a lot of information in this blog. Personal finances have really changed in last decades. Young couples used to live in a small apartment, until it was payed and then search for a bigger apartment. Now young couples want their first home to be at least big row house with own yard, without having any savings when buying it. At the same time we talk a lot about slowing life, how is that possible if we want to keep the same standard of living? Choices have to be made.